22 January 2025 , 17:56
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Yuan and Chinese stocks fall despite suggestion of lower tariff than president mentioned during campaign
Donald Trump has threatened to impose a 10% tariff on Chinese-made goods arriving in the US from as early as 1 February, adding that he was also considering levies on imports from the EU.
Ordering an investigation into US-China trade on his second day in office, Trump said any penalties on Chinese goods would be “based on the fact that they’re sending fentanyl to Mexico and Canada”.
“Other countries are big abusers also, you know it’s not just China,” Trump said during an event at the White House on Tuesday, adding that he was also looking at trade with the EU.
“We have a $350bn [£283bn] deficit with the European Union. They treat us very, very badly, so they’re going to be in for tariffs,” he said.
The warning came a day after the new US president told reporters he was thinking about introducing 25% tariffs on imports from Mexico and Canada, America’s largest trading partners, from February.
Trump made threats to impose punitive tariffs on several countries during the election campaign, initially telling China he would introduce a 60% tariff on its imports. Despite his suggestion of a lower 10% tariff, China’s currency and stock markets fell during trading on Wednesday.
The country’s blue-chip CSI 300 index and the Shanghai Composite index closed nearly 1% lower, representing their biggest slide in nearly two weeks and ending a brief respite for markets. Hong Kong’s Hang Seng index closed 1.8% down.
The offshore yuan, which trades without the controls placed by the Chinese financial authorities, also declined against the dollar.
Meanwhile, Trump has signed a slew of executive orders that have reversed Biden-era policies and brought many infrastructure, transport and energy projects to a stop.
An executive order called “Unleashing American Energy” informed agencies they needed to “immediately pause the disbursement of funds”. The measures have put $300bn of potential green infrastructure spending at risk, according to US investors, in figures first reported by the Financial Times.
The funds affected were provided under two key laws passed under Joe Biden: the Inflation Reduction Act; and the bipartisan infrastructure law. These include nearly $50bn in already-agreed Department of Energy loans and a further $280bn worth of loan requests under review, according to FT analysis of the department’s loan portfolio.
The wave of policy announcements during Trump’s first hours back in the White House also included a threat to double the rate of tax for foreign nationals and overseas companies.
This would be retaliation against countries that are considered to impose “discriminatory” taxes on US companies abroad as part of Trump’s “America First” trade policy, and is seen as a move that could spark a global showdown over tax regimes.
The president effectively pulled out of the global corporation tax deal negotiated by the Biden administration in 2021 with nearly 140 countries. Trump said the Organisation for Economic Co-operation and Development plan for a global minimum corporate tax rate of 15% “has no force or effect” in the US.
Trump also unveiled what he called the “the largest AI infrastructure project in history” – a $500bn joint venture between OpenAI, Oracle and SoftBank that aims to build a network of datacentres across the US.
One of Trump’s first big business initiatives of his second presidency, the partnership called Stargate, aims to construct essential datacentres and computing infrastructure needed to power artificial intelligence development.
Meanwhile, all US federal employees working in diversity offices have been ordered to be put on paid leave by Wednesday evening, after Trump’s administration ordered the programmes to close, the White House press secretary, Karoline Leavitt, confirmed.